Task#3

Cost Classification: The Lee's have provided you with the following costs and relevant information that are assumed for year 20XY. A. Classify each of the costs (a. through j.) below under C. as a variable cost or a fixed cost. B. Explain the importance of distinguishing between variable and fixed costs. C.I need a budgeted income statement, assuming 600 units to be produced and sold, a per unit selling price of $85, an income tax rate of 28% and the following information. a. Cost of goods sold of $35 per unit b. Labor = $400/month One part-time employee will be hired to take care of packaging and shipping. This employee will be paid $10 per hour. He or she is estimated to work 40 hours total per month. c. Advertising fees = $3,000 d. Bank fees = $200 e. Phone/internet = $150 per month f. Shipping = $3 per unit g. Utilities = $100 per month h. Office Supplies = $900 i. Conference Exhibitor Fee = $3000 j. Travel Expenses for Conference (e.g. airfare, meals, taxi) = $1200

Break-Even Analysis: You have been asked to calculate how many units need to be sold to break even, based on the costs provided in task #3. Assume that only one conference will be attendedand the estimated expenses associated with this conference are on target. Use the information in task #3 except do not consider taxes.) 8. Contribution Margin: Based on the Break-Even Analysis just performed, what is the contribution margin per unit and the total contribution margin?

A D - GA Search * AutoSave off Cost Classification - Protected... . Saved to this PC v File Home Insert Draw Page Layout Formulas Data Review View Help PROTECTED VIEW Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing D17 A B C D E F Cost Classification Cost Item Cost Variable or Fixed Cost of good $35 per unit Variable 4 Labor $400/month Fixed OT Advertising $3,000 Fixed Bank fees $200 Fixed Phone/internet $150 per unit Fixed 00 Shipping $3 per unit Variable 9 Utilities $100/month Fixed 10 Office Support $900 Fixed 11 Conference $3,000 Fixed 12 Travel Expenses $1,200 Fixed 13 14 15 16 17 18 19 20 Variable or Fixed Cost. Variable vs. fixed cost Budget Income Statement + Ready 93. F Sunny Search L Di F1 DH F2 F3 F4 F5 F6 F7 a % & 2